The Importance Of Brand Building And How To Create A Brand Identity

Brand building is the set of activities that help companies to build an identity that can be recognized by its audience. Thus, it works as a mechanism of identification through core values that signal trust and that help build long-term relationships between the brand and its key stakeholders.

The modern father of brand building in a tech-driven world

As Steve Jobs put it in a speech dated 1997:

To me marketing‘s about values this is a very complicated world it’s a very noisy world and we’re not going to get a chance to get people to remember much about us no company is and so we have to be really clear on what we want them to know about us.

This statement alone might well be considered the essence of brand building, and what it really means to build a brand. Indeed, as Steve Jobs highlighted building a brand is not about writing your mission statement, creating your list of values so that you can match that to who you think can be your customers.

That way is doing it backward. Brand building is about who you are and the kind of company you want to build. And communicating it clearly is not about words.

A business making money is not a brand. And you can still build a business that makes money without building a brand. However, as that company grows your brand will be a way to align people within and outside the organization, thus enabling those people to relate with your company.

This isn’t just a matter of philosophy, where to paraphrase a popular business author, you need to “start with your why.”

There are deeper implications of brand building, that have an evolutionary value, and that might make the long-term survival of your organization depending on your ability to build that brand.

Identity: beyond the job to be done to define who you are

In the same speech in 1997, Steve Jobs was trying to revitalize Apple‘s brand. As he got back to the company after being ousted more than a decade earlier, Apple‘s sales had experienced a massive decline. Several CEOs were hired and paid millions just to make things worse.

Steve Jobs had pretty clear what had happened to Apple. As he highlighted:

The question we asked was our customers want to know who is Apple and what is it that we stand for where do we fit in this world and what we’re about isn’t making boxes for people to get their jobs done although we do that well we do that better than almost anybody in some cases but apples about something more than that.

And he went on:

Apple at the core its core value is that we believe that people with passion can change the world for the better. That’s what we believe and we’ve had the opportunity to work with people like that…and those people that are crazy enough to think they can change the world are the ones that actually do.

Beyond the inspirational quotes, Steve Jobs made an important point. In a tech-driven business world, where technological innovation might seem to be the main driver of success. And where digital channels make it easy to track your marketing strategy.

It’s very easy to get confused about the things that really matter. The rational and conventional approach, based on jobs to be done, starts from several assumptions that might make it hard to build a brand in the first place.

Some of those assumptions are:

  • People always want convenience and low prices.
  • If A is more functional than B, then everyone will want to have A, rather than B.
  • Rationality is what drives people’s actions.
  • What cannot be explained by rationality is either stupid, irrelevant, trivial or not worth our attention.
  • Marketers are liars trying to manipulate people.
  • Perceptions don’t matter as much as engineering.
  • People are biased, and we need to leverage those biases.

I could go on listing dozens of those assumptions, but you get my point. In a tech-driven world, where tracking visible metrics has become inexpensive, those metrics become the key drivers of startups, that neglect their brands and focus on building functional products.

And the thing is, large tech players, with the most valuable brands in the world, are aware of the fact that their brand-building activities are a key element of their success. But they pretend those don’t count.

Companies like Alphabet (Google), Amazon, Apple, and Microsoft, spend billions of dollars in advertising, brand building, distribution, to pass the message that the reason they are so dominating stands with their superior technologies, innovation, supply chain or accounting department.

There is more to the story and this is called brand building. Referring to Nike, in the 1997 speech, Steve Jobs explained:

Nike sells a commodity they sell shoes and yet when you think of Nike you feel something different than a shoe company and their ads as you know they don’t ever talk about the product they don’t ever tell you about their soils and why they’re better than Reebok so what Nike is doing in their advertising they honor great athletes and they honor great athletics that’s who they are that’s what they are about.

Trust: how do I trust you if you don’t “waste money” on branding?

A flower is a weed with an advertising budget. ― Rory Sutherland, Alchemy. 

Rory Sutherland, Vice Chairman of Ogilvy in the UK, in his book Alchemy, explains the evolutionary forces behind branding. As he highlights ever since science has become so powerful in explaining physical processes.

More and more intellectuals tried to apply the scientific method to real-life scenarios, where there is an extremely high degree of uncertainty. As former trader, Nassim Nicholas Taleb explains in his book Antifragile, in the real world, what’s really hard is understanding the problem in the first place.

Indeed, often we try to solve a problem that makes us look good but it’s the wrong one, we tend to apply rationality and logic (that look good on paper) to situations of high uncertainty. In short, as Jeff Bezos highlighted and recounted in a Shareholders letter in 2006:

We have made a decision to continuously and significantly lower prices for customers year after year as our efficiency and scale make it possible. This is an example of a very important decision that cannot be made in a math-based way. In fact, when we lower prices, we go against the math that we can do, which always says that the smart move is to raise prices.

In short, this is not a sort of decision that can be made with mathematical models, but it requires vision and the understanding of hidden facets of reality (which the human brain might be wired for).

Where Amazon is endowed with price elasticity models able to predict in the short-term that lowering prices has short-term negative consequences on the bottom-line, Jeff Bezos highlighted:

Our judgment is that relentlessly returning efficiency improvements and scale economies to customers in the form of lower prices creates a virtuous cycle that leads over the long term to a much larger dollar amount of free cash flow, and thereby to a much more valuable Amazon.com.

While this decision didn’t make much sense from a purely economic standpoint, it did generate the so-called Amazon Flywheel or virtuous cycle.

In short, there are certain decisions, where optimization is worth pursuing. And in these cases, quantitative and mathematical models do work well. In all the other cases, where there is a high degree of ambiguity and uncertainty, those models won’t work.

But there is more to it. In a scenario of ambiguity and uncertainty (as most of the important business decisions), Rory Sutherland highlights how psycho-logic plays a key role. In short, what seems irrational it has an evolutionary value that can’t be explained by logic.

Rory Sutherland in The Wiki Man highlights:

I think if you set out to build a great business, you’ll stand a fair chance of building a great brand. I am not equally confident that someone aspiring to build a great brand will build a great business.

And money spent on branding seems to be one of those things that while can’t be explained by economists, it is instead an element of trust. In short, as a subconscious assumption, if you’re spending money to build a brand and a reputation, you have more skin in the game, and more to lose.

As such you might deserve more trust (this isn’t supposed to be rational or logical, but rather make sense to our subconscious).

Reputation and social proof: I show you who I am by telling you who you are

“capitalism is not “materialistic,” but “semiotic.” It concerns mainly the psychological world of signs, symbols, images, and brands,” ― Geoffrey Miller, Spent: Sex, Evolution, and Consumer Behavior.

Advertising and branding play a key role in building up trust. And we might argue that those are the backbones of capitalism itself. In short, larger companies that have a presence that goes beyond the neighborhood, need brands to thrive. And this is even truer in the digital age.

Imagining a train of thoughts of the person that engages with our brand and expensive branding campaign, the subconscious might implicitly say something along these lines “hey if you can afford to spend money on advertising your product, it must be good. And besides, you have money to allocate for that, which tells me you are financially more reliable. Thus I know you’ll be able to assist if the product won’t work and you’ll stick around long enough for me to trust you.”

In addition to that, branding has a social role, that Geoffrey Miller explains well, in his book, Spent:

All ads effectively have two audiences: potential product buyers, and potential product viewers who will credit the product owners with various desirable traits.

And as he explains in the same book:

The rich covet the new iPod not for the sounds it can make in their heads, but for the impressions it can make in the heads of others.

The power of perception: 2+2 does not equal 4

Engineers, medical people, scientific people, have an obsession with solving the problems of reality, when actually … once you reach a basic level of wealth in society, most problems are actually problems of perception ― Rory Sutherland, Alchemy. 

This isn’t easy to grasp and internalize, however, perception can enhance our products. However, perception isn’t just about improving the user experience, building more technical specifications in your product, or adding features.

Perception can be way cheaper to implement yet more powerful. However, it requires a shift in mindset, as things that might sound trivial, irrational or illogic will suddenly unveil their genius.

Coca-Cola knows that well when it developed a unique shape for its bottles. And that happened a century ago. As the story goes, when Coca-Cola wanted to preserve its brand, it invited its bottlers to come up with a “bottle so distinct that you would recognize if by feel in the dark or lying broken on the ground.

Also, tech giants know that. When Google launched its search engine, its super-clean design, not only enhanced user experience. But it also signaled one thing (as Rory Sutherland explains in Alchemy) that Google was actually good at search!

So much so, that “google it” became a synonym for “search it” and it actually now became ever more used:

search-it-vs-google-it

How “google it” has become more popular than “search it” (according to Google Trends). In short, not only Google has become a synonym with search, it has expanded its meaning, as it has made searching go mainstream, thus educating billions of people to google things out.

There are thousands if not millions of hidden possible ways we can use perception, at no additional cost, or capital investments to improve our business right now, by changing the way our product or service is perceived.

It just requires creativity and the ability to think that what might seem illogical can actually turn out to be subconsciously rational, even if hard to explain.

Signaling: how I look and what I do have nothing to do with how I look and what I do

“The peacock’s gaudy tail does not enable him to fly any higher, but it raises his status in the eyes of the peahen.” ― Nicholas Humphrey, Consciousness As Art.

If you think that showing off, advertising and branding are just synonyms of stupidity, let’s try to consider them from a different perspective. According to evolutionary psychologists, like Nicholas Humphrey, there are hidden reasons why we act the way we do, even when it seems irrational.

And it is often due to signaling. According to the signaling, theory from an evolutionary standpoint, those signals need to be costly. For instance, in the peacock case, the signal of fitness is so costly that it actually becomes a handicap.

According to the Handicap Principle,” reliable signals must be costly to the signaler, costing the signaler something that could not be afforded by an individual with less of a particular trait.”

Some evolutionary psychologists might go as far as saying that developing wings in the first place was for sexual selection and that flying was a side effect of that.

Thus, if you do understand signaling in that context, you also understand why it becomes important for brands as well to advertise themselves to become “fit.” And the best way to advertise themselves to choose to build a business that lasts.

Context and meaning

A last key principle to internalize is the importance of context in human decision making. The way we perceive things is driven by context. That might sound trivial, yet it is important to recall that wearing a mask or costume at the office on Halloween is acceptable (also among engineers) but wearing the same costume on a regular day would qualify you as a freak.

Understanding the kind of context people experience your product or service. Or determining the kind of context you want to create for your brand it is critical to building a successful brand.

References and suggested readings

The ideas behind this guide have been inspired by several books and authors:

alchemy-book

Skin in the Game: Hidden Asymmetries in Daily Life

antifragile

spent-book

the-mating-mind-book

darwing-and-the-making-of-sexual-selection-book

Other business resources:

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, professionals, and entrepreneurs in 2019 alone | Gennaro is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate and become profitable | Gennaro is an International MBA with emphasis on Corporate Finance | Subscribe to the FourWeekMBA Newsletter | Or Get in touch with Gennaro here